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Puerto Rico marketplace sales tax obligations

Puerto Rico has imposed Sales Tax collection and remittance obligations on facilitating marketplaces starting 1 January 2020. This was a retrospective move with the legislation passing in December 2020. The Puerto Rico current sales tax rate is 10.5%.

Puerto Rico has introduced the ‘mail-order’ obligation on both goods and intangible digital products – which includes e-services. There is a sales tax registration threshold for foreign marketplaces:

  • Annual sales of USD100,000; or
  • 200 or more e-commerce transactions per year

As an unincorporated territory of the US, the obligation for marketplace to split sales taxes on third-party merchants replicates the US South Dakota vs Wayfair Supreme Court ruling which introduced the out-of-state seller economic nexus concept. This included the right for states to impose tax collection obligations on marketplaces for their remote sellers’ local sales.  US sales tax on digital products or services vary from state-to-state.

What digital services are liable to sales tax

“Specific digital products” means electronically transferred:

  • greeting cards,
  • images,
  • video or electronic games or entertainment,
  • group memberships to obtain exclusive electronic or audio visual data; and
  • any other product that could be considered a digital product.

Follow VAT Calc’s global VAT and GST on digital services blog keeps a live update on how countries are imposing indirect taxes on non-resident providers and electronic marketplaces.

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